Spot Gold Prices – Reversal In Daily Chart 6th March 2009

Well, our views of the market were proved correct yesterday, with the doji of Wednesday proving to be the turning point for the spot gold prices yesterday. This combined with the fact that silver prices rose on the day that gold prices indicated a turning point were the clue for us as traders, and with a bullish engulfing signal in the daily chart, we should now be looking for small long positions today with stop losses set below the $900 per ounce region. As I have mentioned before, whenever prices bounce off a moving average this is generally a good signal, that this technical indicator will provide support to the move, and we have seen this in the last two days. For complete comfort we would normally wait for prices to move back above both the 14 day and 40 day averages, but I believe that we have a good chance of success today with small long positions and tight stop losses. The major issue for later is of course the Non Farm Payroll data which is due out later today. Whether you choose to trade through this news is for you to decide and you can now find the latest gold prices on the live price chart.

The move higher yesterday gaining $21.35, was also helped by safe haven buying, in reaction to weaker equities which saw the Dow Industrial hitting a fresh 12 year low. So after flipping to a positive correlation between stocks and gold, mainly because the decline in shares was so violent it triggered margin calls, we’re now back to a more consistent negative correlation. The recent 10% pullback has brought in bargain hunters offering extra support for gold prices, as did US productivity data widely described as inflationary. With both NFP and the weekend ahead we need to be cautious in our approach today, and I would suggest taking an profits off the table ahead of the two day break, as traders square their positions at the end of the week.